Jane Co. has preferred stock that pays a $6.00 annual dividend and has a price of $96.00. What is the rate of return that investor's require for this preferred stock?

Question

Quizplus · Accepted Answer

The rate of return required for this preferred stock can be calculated using the formula for dividend yield, which is the annual dividend divided by the price of the stock. So, the calculation is $6.00 / $96.00 = 0.0625 or 6.25%.

Jane Co Has Preferred Stock That Pays a $6